Monarch America, Inc. - FORM 10-K

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EXCEL - IDEA: XBRL DOCUMENT - Monarch America, Inc.	Financial_Report.xls
EX-32.2 - CERTIFICATION - Monarch America, Inc.	btfl_ex322.htm
EX-32.1 - CERTIFICATION - Monarch America, Inc.	btfl_ex321.htm
EX-31.2 - CERTIFICATION - Monarch America, Inc.	btfl_ex312.htm
EX-31.1 - CERTIFICATION - Monarch America, Inc.	btfl_ex311.htm

U.S. SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES

EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2014

Commission file number: 000-55260

MONARCH AMERICA, INC.

(Exact name of registrant as specified in its charter)

Nevada		99-0372219
(State of incorporation)		(I.R.S. Employer Identification No.)

1150 W. Custer Place

Denver, CO 80223

(Address of Principal Executive Offices, Zip Code)

844-852-1537

(Registrant's Telephone Number, Including Area Code)

Securities registered pursuant to Section 12(b) of the Exchange Act:

None

Securities registered pursuant to Section 12(g) of the Exchange Act:

Common Stock, $0.001 par value

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ¨ No x

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ¨ No x

Indicate by check mark whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No ¨

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer	¨	Accelerated filer	¨
Non-accelerated filer	¨	Smaller reporting company	x
(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ¨ No x

The aggregate market value of the registrant’s common stock held by non-affiliates based upon the closing price of $4.00 per share of common stock as of May 30, 2014 was $58,400,012.

As of March 30, 2015, there were 104,904,618 shares of the issuer’s common stock issued and outstanding.

Documents Incorporated By Reference: None

TABLE OF CONTENTS

		Page
PART I
Item 1	Business		4
Item 1A	Risk Factors		8
Item 1B	Unresolved Staff Comments		8
Item 2	Properties		8
Item 3	Legal Proceedings		8
Item 4	Mine Safety Disclosures		8

PART II
Item 5	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities		9
Item 6	Selected Financial Data		9
Item 7	Management’s Discussion and Analysis of Financial Condition and Results of Operations		10
Item 7A	Quantitative and Qualitative Disclosures About Market Risk		13
Item 8	Financial Statements		14
Item 9	Changes in and Disagreements With Accountants on Accounting and Financial Disclosure		15
Item 9A	Controls and Procedures		16
Item 9B	Other Information		17

PART III
Item 10	Directors, Executive Officers and Corporate Governance		18
Item 11	Executive Compensation		19
Item 12	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters		21
Item 13	Certain Relationships and Related Transactions, and Director Independence		22
Item 14	Principal Accounting Fees and Services		24

PART IV
Item 15	Exhibits and Financial Statement Schedules		25

SIGNATURES			27

Explanatory Note

Monarch America, Inc. filed an Annual Report on Form 10-K for the fiscal year ended November 30, 2014 with the Securities and Exchange Commission on March 3, 2014. However, as a result of the consummation by the Company of Jeremy N. Stout, Inc. d/b/a The Big Tomato, the fiscal year of the Company became December 31st. Accordingly, in addition to the filing of the Form 10-K for the year ended November 30, 2014 (without regard to the merger of The Big Tomato), the Company is filing this Annual Report for the fiscal year ended December 31, 2014 including the stand-alone financials of The Big Tomato, Inc. (f/k/a Jeremy Stout, Inc. d/b/a The Big Tomato). These financial statements are presented as the “predecessor financial statements” in accordance with the SEC rules.

PART I

Item 1. Business.

As used in this Annual Report on Form 10K (this “Report”), unless the context otherwise indicates, references to the “Company,” the “Registrant,” “we,” “our,” “us,” or “Monarch” refer to Monarch America, Inc. and its wholly-owned subsidiaries. Jeremy N. Stout, Inc. d/b/a The Big Tomato was acquired by and is now a wholly-owned subsidiary of Monarch America as of January 14, 2015. References to “the Tomato” refer to what is now The Big Tomato, Inc., formerly Jeremy Stout, Inc. d/b/a The Big Tomato, Inc. The financial statements included in this filing summarize the financial results of solely Jeremy Stout, Inc. d/b/a The Big Tomato, Inc. for the years ended December 31, 2014 and 2013, and do not include the consolidated results of Monarch America, Inc.

Forward-Looking Statements

Certain statements contained in this report, including statements regarding our business, financial condition, our intent, belief or current expectations, primarily with respect to the future operating performance of the Company and other statements contained herein regarding matters that are not historical facts, are "forward-looking" statements. You can identify forward-looking statements by those that are not historical in nature, particularly those that use terminology such as “may,” “will,” “should,” “expects,” “anticipates,” “contemplates,” “estimates,” “believes,” “plans,” “projected,” “predicts,” “potential,” or “continue” or the negative of these similar terms. Future filings with the Securities and Exchange Commission, future press releases and future oral or written statements made by us or with our approval, which are not statements of historical fact, may contain forward-looking statements. Because such statements include risks and uncertainties, actual results may differ materially from those expressed or implied by such forward-looking statements.

All forward-looking statements speak only as of the date on which they are made. We undertake no obligation to update such statements to reflect events that occur or circumstances that exist after the date on which they are made, except as required by federal securities and any other applicable law.

Overview

As further described below, Monarch America, Inc. (the “Company”) is actively involved in the business of being a vertically-integrated cannabis management company. Since current management has taken control of the Company in March 2014, (i) we are involved in the sale and distribution of hydroponic lights and equipment as a result of our acquisition of The Big Tomato, (ii) we are aiming to generate sales of specialty soil additives used in the growth of marijuana and other hydroponics and (iii) we have consummated the acquisition of certain intellectual property, including trademarks and domain names, used by the Company in branding and marketing its products and services.

Monarch America aims to oversee and manage all facets of retail operations, from property management, technology and equipment leasing to inventory control, staffing, and day-to-day operational management.

Corporate History

Monarch America, Inc

The Company was incorporated in the State of Nevada on September 14, 2010. On March 19, 2014, John Ngitew and Grace Parinas, the former principal shareholders of the Company f/k/a Lingas Ventures, Inc., entered into a Stock Purchase Agreement which provided for the sale of shares of common stock of the Company representing 50% of the issued and outstanding share capital of the Company on a fully-diluted basis to Eric Hagen, Jonathan Hunt and Steven Brandt. The consideration paid for the shares was $21,750. In connection with the transaction, Mr. Ngitew released the Company from all debts owed to him. Effective as of March 19, 2014, in connection with the sale of the shares to Messrs. Hagen, Hunt and Brandt, both John Ngitew and Grace Parinas resigned from all their respective positions as officers and directors of the Company. The Board of Directors of the Company elected Eric Hagen as President and Chief Executive Officer, Jonathan Hunt as Vice President and Secretary and Steven Brandt as Vice President and Treasurer, and said three individuals became the directors of the Company.

On May 19, 2014, the Company changed its name to "Cannabis Kinetics Corp." and effectuated a 1 for 10 reverse stock split. As a result of the amendment to the company's Articles of Incorporation, the Company was authorized to issue 10,000,000 shares of blank check preferred stock. The number of authorized shares of common stock, 2,610,000,000, par value $.001 per share, was not affected by the amendment.

On September 11, 2014, the Company acquired substantially all of the assets of REM International, LLC, a Colorado limited liability company (“REM”) pursuant to an asset purchase agreement, dated June 6, 2014 by and among the Company, REM, and Robert E. Matuszewki, the owner of all of the issued and outstanding equity interests in REM. The consideration paid by the Company for the assets was $118,500 and the issuance 1,500,000 shares of the Company’s common stock, par value $0.001 per share. Pursuant to the amendment to the Purchase Agreement dated as of September 11, 2014, the Company agreed to pay REM $7,000 for the next five months and commencing March 2015 $12,750 for the subsequent six months. The assets purchased consist of certain intellectual property, including trademarks and domain names. The Company did not assume any liabilities in connection with the acquisition.

On December 5, 2014, the Company borrowed $75,000 from Glamis Capital SA pursuant to the terms of a promissory note. The note provides that the Company can borrow up to an aggregate of $1,500,000 from Glamis until January 30, 2015. Interest accrues on the outstanding principal amount at the rate of 8% and is payable quarterly beginning August 15, 2015. Principal and all accrued interest thereon is due and payable on the earlier to occur of: (i) January 30, 2016; (ii) an issuance by the Company or an acquisition of voting securities of the Company of 30% or more of the then outstanding shares or the combined voting power of the Company’s then outstanding voting securities; (iii) the individuals who are currently members of the Board of Directors of the Company cease for any reason to constitute at least two-thirds of the members of the Board; (iv) a merger, consolidation or other business combination with or into another company; or (v) the sale or other disposition of all or substantially all of the assets of the Company. As of March 30, 2015, the Company borrowed an aggregate of $1,150,000 from Glamis Capital.

On March 26, 2014, the Company borrowed $175,000 from Backenald Trading, Ltd. pursuant to the terms of a promissory note. Interest accrues on the outstanding principal amount at the rate of 8% and is payable quarterly beginning August 31, 2015. Principal and all accrued interest thereon is due and payable on the earlier to occur of: (i) March 26, 2016; (ii) an issuance by the Company or an acquisition of voting securities of the Company of 30% or more of the then outstanding shares or the combined voting power of the Company’s then outstanding voting securities; (iii) the individuals who are currently members of the Board of Directors of the Company cease for any reason to constitute at least two-thirds of the members of the Board; (iv) a merger, consolidation or other business combination with or into another company; or (v) the sale or other disposition of all or substantially all of the assets of the Company.

On March 26, 2014, the Company borrowed $175,000 from Adams Ale, Inc. pursuant to the terms of a promissory note. Interest accrues on the outstanding principal amount at the rate of 8% and is payable quarterly beginning August 31, 2015. Principal and all accrued interest thereon is due and payable on the earlier to occur of: (i) March 26, 2016; (ii) an issuance by the Company or an acquisition of voting securities of the Company of 30% or more of the then outstanding shares or the combined voting power of the Company’s then outstanding voting securities; (iii) the individuals who are currently members of the Board of Directors of the Company cease for any reason to constitute at least two-thirds of the members of the Board; (iv) a merger, consolidation or other business combination with or into another company; or (v) the sale or other disposition of all or substantially all of the assets of the Company.

On December 18, 2014, the Company effectuated a 3-1 forward stock split and shareholders owning shares on such record date received 2 shares of the Company in addition to each share they owned as of such date. As of December 26, 2014, the name of the Company on the Daily List changed to “Monarch America, Inc.”

The Big Tomato

Founded in May 2001, The Big Tomato provides thousands of indoor gardeners and commercial growers with top quality hydroponic and indoor gardening supplies at competitive costs. The Big Tomato sells various types of products of indoor gardening products; grow boxes, grow lights, hydroponic systems, ballasts, bulbs, nutrients and additives, and other high-end hydroponic and gardening items.

On January 14, 2015, the Company completed the acquisition of Jeremy N. Stout, Inc. d/b/a The Big Tomato, a Colorado corporation (“The Big Tomato”) pursuant to which The Big Tomato, Inc., a Colorado corporation and a wholly-owned subsidiary of the Company was merged with and into The Big Tomato. In addition to $400,000 in cash paid by the Company to Jeremy Stout and Josh Field, the shareholders of The Big Tomato, the Company issued an aggregate of 8,100,000 shares of common stock of the Company to the Shareholders. The Company also issued a secured promissory note in the principal amount of $1,000,000 (collectively, the “Notes”) to each of Messrs. Stout and Field. The Notes are payable in eight equal installments of $125,000 commencing April 1, 2015, accrue interest at the rate of 8% per annum and are secured by a first priority lien on all the assets of The Big Tomato. As additional security for the Notes, the Company pledged all of the shares of The Big Tomato to each of Messrs. Stout and Field. The security interest in such assets and the pledged stock is the exclusive remedy in the event of a default under the Notes. The Notes also provide that the Company shall be entitled to offset any damages incurred by it or its affiliates against the principal amount of the Notes arising from an inaccuracy or breach of any representation or warranty of to each of Messrs. Stout and Field or failure to perform or comply with the Notes or other agreements or documents delivered in connection with the Merger.

For information on key financial highlights, see Item 7 of this report, “Management Discussion and Analysis of Financial Condition and Results of Operations.”

Business

During the year ended December 31, 2014, the Tomato generated approximately $3,017,356 of net revenue during the course of its normal retail business activity of supplying indoor gardening materials and equipment. The Tomato’s principal line of business is providing indoor gardening supplies to recreational and commercial buyers. These buyers range from the casual gardener with a few plants and maybe one light, to large indoor grow facilities housed in warehouses with hundreds of lights. Orders fulfilled by the Tomato can range from tens of dollars to over $100,000, whereby the customer either picks up the product themselves at the retail storefront, or at the adjacent warehouse. There are some cases in which the Tomato uses third party shippers to deliver products to the customer, primarily in out-of-state arrangements. There is diversification in the customer base, so the Tomato is not overly reliant on one or a few major customers.

Operating Strategy of the Big Tomato

The Big Tomato has set itself apart over the past 15 years through its focus on cost savings, inventory management, and providing expertise and authority on hydroponic processes and products. These initiatives enabled the Tomato to establish itself as a trusted name in the Denver community as an indoor gardening supply store.

	·	Cost Savings. The Tomato has been able to provide high quality products at low prices due to its focus on developing long-lasting and meaningful relationships with its suppliers. Management has focused on strengthening these relationships by consistently using the same vendors. This has allowed the Tomato to gain favorable pricing terms on the products it carries—a cost savings that it is then able to pass along to its own customers, all without sacrificing quality.

	·	Inventory Management. Other large suppliers may offer a light or a soil additive at a cheaper price, but it is unlikely that they will carry everything a potential indoor gardener will need under one roof or readily available on hand. Through the Tomato’s inventory management strategies, it ensures that it will have the right products readily available so that any gardening novice that may wander in can leave with everything they need in order to begin their indoor gardening adventure. The ability to consistently meet customers’ needs immediately is also a key factor that has ensured the Tomato’s continued success, considering that everything is available for sale on the internet. While inventory availability is a key success factor, inventory also bears the risks of obsolescence and unnecessarily tying up working capital. The Tomato has successfully balanced the risks and rewards of adequate inventory supplies by implementing, developing, and maintaining a just-in-time inventory system. This allows for the Tomato to respond quickly to customer demands, while still being a one-stop shop for a multitude of hydroponic supplies.

Hydroponic Process and Product Authority. As a supplier to the hydroponic market, the Tomato has cornered a unique niche. Not only do customers come to the Tomato to find all of the greenhouse supplies at a low cost, they come to ask for advice about processes about which the average person is not knowledgeable. A majority of the Tomato’s employees have been members of the company for over 5 years, many of whom are also hydroponic enthusiasts and have experimented with new processes and technologies on their own gardens. This wealth of knowledge is shared with customers who come into the retail store, trying to find the products that will best suit their needs.

Competition

Monarch America has significant amount of direct competitors in both the indoor gardening supply business and the consulting and management business. Our competitors in the management and consulting include other management companies and investment funds trying to build out and lease commercial grow spaces. As Monarch intends to compete nationally, we will face additional competition from other companies, most of which may be better funded and more established.

The growth of the Colorado cannabis market has attracted many businesses trying to enter the indoor gardening and hydroponic industry. Although there are a number of other indoor gardening and hydroponic centers, we feel that as one of the longest standing indoor gardening and hydroponic centers in the state of Colorado (established over 15 years ago), our competition is based primarily on price. The Big Tomato's purchasing power provides Monarch with a competitive advantage due to the volume of products sold each month, as our competition is unable to get the pricing advantage we have.

The Tomato’s retail industry is highly competitive, with competition based primarily on customer service, price, store location and appearance, along with quality, availability and assortment of merchandise. The Tomato is exploring means of differentiation including identifying new niche markets to corner and penetrate, and carrying exclusive and proprietary products that it has control over, such as Miraclays and AgriAloe soil additives—products that competitors do not have access to due to exclusive supply and distribution agreements.

Monarch has also entered into sole distributorship agreements with Miraclays and Coats AgriAloe.

MiraClays is microscopic crystalline calcium clay, rich in over 70 other minerals and trace elements. When utilized in the agricultural industry, 100% natural MiraClays can be applied directly onto the growing medium or mix in water. According to MiraClays’ owner and founder, Mike Douglas, along with anecdotal evidence from customers, the results of using MiraClays in cultivation are larger and greener plants. Laboratory testing and extensive anecdotal evidence suggests that MiraClays utilized in cannabis growing operations provides increased tetrahydrocannabinol/cannabidiol (THC/CBD) yield per plant, accelerated growth rates, enhanced potency and flavor, and healthier plants with sturdier stocks and more extensive root systems. There are a number of studies looking into other applications and medicinal benefits of MiraClays. For more information, visit www.miraclays.com.

Coats AgriAloe LLC is a Texas-based developer of patented and proprietary soil amendment products. Coats AgriAloe LLC was founded by world renowned Aloe Vera pioneer, expert, and advocate Bill Coats, R.Ph., CCN., a Texas-based developer of patented and proprietary soil amendment products. Aloe Vera has been utilized in herbal medicine for thousands of years and is now widely used in the cosmetics and alternative medicine industries. In the last 60 years, numerous attempts were made to isolate, extract, and replicate the effective ingredients in Aloe Vera. Each attempt was met with only partial success or complete failure. According to Dr. Coats and research studies done at the Texas A&M University, the complex chemistry of Aloe Vera still defies complete analysis and replication, which makes the soil additive unique in its application and is a differentiated product that is set apart from the competition. For more information on AgriAloe, visit agrialoe.com.

Government Regulation and Approvals

We are not aware of any governmental regulations or approvals required for our management services. However, since we are selling hydroponic equipment and soil primarily for the growth of marijuana; and we are consulting for a grow facility, it is possible that our contemplated activities could be deemed to be facilitating the selling or distribution of marijuana, and would be deemed to be in violation of the Federal Controlled Substances Act, or to constitute aiding or abetting, or being an accessory to, a violation of that Act. Moreover, local, state and federal cannabis and marijuana laws and regulations are constantly changing and they are subject to evolving interpretations, which could require us to incur substantial costs associated with compliance. The evolving legal and political landscape may also require us to alter one or more of our contemplated service offerings. In addition, violations of these laws, or allegations of such violations, could disrupt our contemplated business and result in a material adverse effect on our revenues, profitability, and financial condition. We cannot predict the nature of any future laws, regulations, interpretations or applications, nor can we determine to the fullest extent what effect additional governmental regulations or administrative policies and procedures, when and if promulgated, could have on our contemplated business. Any change in law or interpretation could also have a material adverse effect on our contemplated business, financial condition, and results of operations.

Intellectual Property

In connection with the acquisition of the assets of REM International, LLC, the Company acquired various domain names and trademarks related to food and beverage products, global sourcing and trade which the Company intends to use in the marijuana and cannabis industries in the state of Colorado, where medical and recreational marijuana is legal.

Employees

As of March 30, 2015, Monarch America has 13 full-time employees. This includes Eric Hagen, CEO, and Jonathan Hunt, Treasurer and Secretary, as well as Josh Field, VP, and Jeremy Stout, VP of The Big Tomato.

Item 1A. Risk Factors

Smaller reporting companies are not required to provide the information required by this Item 1A.

Item 1B. Unresolved Staff Comments

None.

Item 2. Properties

Monarch is a subtenant of approximately 3,000 square feet at a warehouse located at 1150 W. Custer Place, Denver, Colorado. Management believes that such space is adequate for its current use. We can utilize such space through August 31, 2015. As part of that agreement, the Company assumed the rent liability of the warehouse for the amount of $20,000 per month until August 31, 2015, along with other associated build-out costs estimated to be $500,000. As described in more detail below, pursuant to the management services agreement with our landlord, the subtenant on the property, is to pay us $50,000 per month from August 2015 through May 2018.

The Big Tomato has a retail storefront and warehouse/commercial distribution center in Aurora, Colorado. The lease for the warehouse space, which expires October 31, 2018 provides for monthly payments of $2,133 for the first two years (the lease commenced in November 2013); $2,266.67 for years three and four and $2,400 for the fifth year. The lease for the retail storefront space, which expires March 31, 2019, provides for monthly payments of $5,235.05 in the first year, $5,413.34 in the second year and $5,568 for the remaining term.

Item 3. Legal Proceedings

There are no pending legal proceedings to which the Company is a party or in which any director, officer or affiliate of the Company, any owner of record or beneficially of more than 5% of any class of voting securities of the Company, or security holder is a party adverse to the Company or has a material interest adverse to the Company. The Company’s property is not the subject of any pending legal proceedings.

Item 4. Mine Safety Disclosures

Not applicable

PART II

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.

Market Information

The common stock of Monarch America, Inc. currently quoted under the symbol “BTFL.” The following table sets forth, for the periods indicated, the high and low sales prices for the Common Stock, as reported by Yahoo Finance. The quotations reflect inter-dealer prices, without retail mark-up, mark-down or commission, and may not represent actual transactions.

Quarter Ended	High		Low

December 31, 2013	NA		NA
March 31, 2014	NA		NA
June 30, 2014	$	4.00	$	2.25
September 30, 2014	$	3.50	$	1.11
December 31, 2014	$	1.54	$	0.60

The prices reported above do not reflect the 3 for 1 forward stock split on December 18, 2014 and the 1 for 10 reverse stock split on May 19, 2014.

The last reported sales price of our common stock on the OTCQB on March 30, 2015, was $.11.

Dividend Policy

We have not declared or paid dividends on our common stock since our formation, and we do not anticipate paying dividends in the foreseeable future. Declaration or payment of dividends, if any, in the future, will be at the discretion of our Board of Directors and will depend on our then current financial condition, results of operations, capital requirements and other factors deemed relevant by the board of directors. There are no contractual restrictions on our ability to declare or pay dividends.

Holders

As of March 30, 2015, there were 104,904,618 shares of common stock issued and outstanding, which were held by 30 stockholders of record.

Equity Compensation Plans

We do not have any equity compensation plans.

Recent Sales of Unregistered Securities; Use of Proceeds from Registered Securities

There were no sales of unregistered securities during the Company’s fiscal year ended December 31, 2014 which were not previously reported.

Purchases of Equity Securities by the Small Business Issuer and Affiliated Purchasers

None.

Item 6. Selected Financial Data.

Smaller reporting companies are not required to provide the information required by this Item 6.

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The following discussion and analysis summarizes the significant factors affecting our consolidated operating results, financial condition, liquidity and capital resources during the two-year period ended December 31, 2014. We intend for this discussion to provide the reader with information that will assist in understanding our financial statements, the changes in certain key items in those financial statements from year to year, and the primary factors that accounted for those changes, as well as how certain accounting principles affect our financial statements. This discussion should be read in conjunction with our consolidated financial statements and notes to the consolidated financial statements included in this Annual Report on Form 10-K that have been prepared in accordance with accounting principles generally accepted in the United States of America. This discussion and analysis is presented in six sections:

	·	Executive Overview

	·	Results of The Big Tomato Operations

	·	Liquidity and Capital Resources

	·	Going Concern Consideration

	·	Off-Balance Sheet Arrangements

	·	Critical Accounting Policies and Estimates

Our Management’s Discussion and Analysis contains not only statements that are historical facts, but also statements that are forward-looking. Forward-looking statements are, by their very nature, uncertain and risky. These risks and uncertainties include market and customer acceptance of our services and equipment; the ability to obtain financing to expand its operations; the ability to attract qualified management representatives, competition, pricing and development difficulties; the ability to fully implement our business plan as a result of being a reporting issuer with the Securities and Exchange Commission; general industry and market conditions and growth rates and general economic conditions; existing government regulations and changes in, or the failure to comply with, government regulations; adverse publicity; competition; the loss of significant customers or suppliers; fluctuations and difficulty in forecasting operating results; changes in business strategy or development plans; business disruptions; the ability to attract and retain qualified personnel; and other risks that might be detailed from time to time in our filings with the SEC.

Because forward-looking statements are inherently subject to risks and uncertainties, the actual results and outcomes may differ materially from the results and outcomes discussed in the forward-looking statements. The following discussion and analysis of financial condition and results of operations of the Company is based upon, and should be read in conjunction with, the audited financial statements and related notes elsewhere in this Annual Report on Form 10-K.

Executive Overview

The Tomato’s net revenue increased 22.6% to $3,017,356 during fiscal year 2014, and net income for 2014 was $190,454, which shows a profit margin of 6.3%--a significant improvement over the prior year’s loss of $61,300. The favorable bottom line year-over-year financial results arose from better cost management strategies, including the implementation and utilization of just-in-time inventory strategies resulting in less obsolescence and waste.

For 2014, the Tomato’s cash flows from operating activities were approximately $160,142.

Monarch America

Monarch America, Inc. has been established to provide turnkey solutions, management and consulting services to the legal and regulated marijuana industry. While not directly engaged in the sale of marijuana, Monarch America offers the complete spectrum of capabilities that elevate the business of cultivation from the erratically stocked, sparsely staffed and managed, independent-store model to that of an efficient and consistently managed organization Monarch America aims to oversee and manage all facets of retail operations, from property management, technology and equipment leasing to inventory control, staffing, and day-to-day operational management.

Monarch recently entered into its first management services arrangement with Green Sky Inc., an affiliate of Steve Brandt, a former officer and director, and currently a major stockholder of Monarch. Pursuant to this arrangement, commencing August 2015 through May 2018, Green Sky shall pay us $50,000 each month as a consulting fee, to be revisited quarterly. Green Sky will also pay us for any employees used by Green Sky for consulting or direct labor at its grow facility at the rate of twenty-five percent (25%) of the gross amount paid to such person. If Green Sky terminates the agreement prior to the 3-year term without cause, Monarch shall be entitled to receive its fees for management services all monthly management due and payable.

Monarch hopes to enter into similar arrangements with other facilities.

The Big Tomato

The Big Tomato, Inc., a wholly-owned subsidiary of Monarch America, Inc., is a leading supplier of hydroponics & indoor gardening supplies for Denver, Colorado and the surrounding communities since May of 2001. The Tomato has a proven profitable business model based on establishing and maintaining relationships with both vendors and customers, ensuring that it is receiving the best prices and cost savings from vendors, which it is then able to pass along to its customers. The Tomato sells various types of products to include indoor gardening products, grow boxes, grow lights, hydroponic systems, ballasts, bulbs, nutrients and additives, and other high-end hydroponic and gardening items.

The Tomato has seen great success over the previous 15 years due to its ability to readily fulfill customers’ orders, even with items that may be difficult to find. The Tomato has earned a sound reputation due to the knowledge and ability of its personnel,

2015 and Beyond

Over the longer-term, Monarch and the Tomato remain committed to satisfying customers’ needs whenever and wherever they choose to engage with us and to differentiating with better customer experiences than any other management consulting company or retail hydroponic supplier. As marijuana cultivation continues to be legalized across the country, Monarch aims to be in each new state, establishing a new Tomato outlet to satisfy the new demand of all of the new grow houses. Monarch’s acquisition of the Tomato was strategic in that it aims to provide management and consulting services for these new grow facilities within these new markets, outfitting their grow facilities with supplies and equipment that will be purchased through the local retail Tomato storefront. The Tomato will be able to gain better pricing terms from its vendors due to the larger order quantities at these newly established retail stores in other states. Monarch will be able to obtain these supplies at a deep discount from the Tomato, allowing it to pass cost savings along to the grow facility, its client. This ultimately demonstrates the strategic advantage in the Tomato-Monarch alliance, and is the first step in Monarch’s goal to be a vertically integrated marijuana cultivation and supply company.

Even as we focus on optimizing our business model, driving profitability, and capitalizing on market opportunities within an increasingly favorable legal and political climate, we remain invested in customer experience in order to drive future sales growth and customer retention.

Results of The Big Tomato Operations

For the years ended December 31, 2014 and December 31, 2013

Revenues

The Company generated $3,017,356 and $2,460,261 in net revenues during the years ended December 31, 2014 and December 31, 2013, respectively, as a result of its normal business operations.

Total operating expenses

During the year ended December 31, 2014, total operating expenses for the Tomato were $597,311, which consisted of wages of $288,147, rent of $116,036, general and administrative expenses of $94,755, insurance of $46,146, professional fees of $23,394 and depreciation of $8,390. During the year ended December 31, 2013, total operating expenses were $613,897. Total operating expenses decreased $16,586, or 2.7%. The cost savings was a result of a refocus on controlling overhead costs and the trailing off of depreciation costs.

Net Income/Loss

During the year ended December 31, 2014, the Tomato had a net income of $190,454, as compared with a net loss of $61,300 for the year ended December 31, 2013. In 2013, the Tomato encountered financial difficulties surrounding certain inventory it was carrying, along with limited revenues and high costs in SG&A. The Tomato identified the need to cut costs and launched efforts do so. Also, with the legalization of marijuana in Colorado, the Tomato was in the right place at the right time. Having been an established company with a loyal customer base, the Tomato was able to attract new customers while fulfilling existing customers’ orders for their own larger endeavors in cultivation in 2014, which was the leading factor in the company’s turnaround in bottom-line results year-over-year.

Liquidity and Capital Resources

As of December 31, 2014, the Tomato had $13,018 of cash and total liabilities of $322,524. This low level of cash was a result of the acquisition of the Tomato by Monarch America, whereby the former owners Messrs. Stout and Field were entitled to the Tomato’s cash balance prior to closing.

The Tomato has continued this profitable trend of 2014 by showing a continued surplus in the beginning of 2015. However, in order to maintain its operations and its ability to manage its supply chain and distribution channels, the Tomato must have adequate working capital so as to have the financial flexibility to fulfill large inventory orders by its customers. The profits of the Tomato does not mean that it will be able to support the capital burn or operations of Monarch in the near future.

Management of Monarch estimates that Monarch will need approximately $2,140,000 for the next 12 months of operations, which includes $1,000,000 to pay the sellers for the sale of The Big Tomato. Quarterly interest payments are due to Glamis Capital commencing August 15, 2015 with the outstanding principal of $1,150,000 and all accrued interest due no later than January 30, 2016. Quarterly interest payments are due to the Company’s other two lenders commencing on August 31, 2015. The Company does not have sufficient cash to fund its expenses over the next twelve months. There can be no assurance that additional capital will be available to the Company. If the Company fails to raise adequate capital, its inability to raise funds for the above purposes will have a severe negative impact on its ability to remain a viable company. Although Monarch does anticipate receiving monthly payments from Green Sky pursuant to its management services agreement, Monarch does not have sufficient cash to fund its expenses over the next twelve months.

Going Concern Consideration

Effective as of January 1, 2015, the Tomato merged with Monarch, which had a working capital deficit of $53,979 and had an accumulated deficit of $824,488. Monarch recognized no additional revenue in December 2014. The repositioning of Lingas Resources into what is now Monarch America required substantial capital. There is doubt and uncertainty as to whether Monarch will be able to sustain itself, even if it obtains the necessary capital for its operations when it begins to collect on the terms of the management agreement with Green Sky. Moreover, $1,150,000 of borrowed principal plus accrued interest is due in full on January 30, 2016. Monarch’s ability to continue as a going concern is dependent on management’s ability to raise additional capital, despite the profits shown by The Big Tomato.

These factors raise substantial doubt regarding the Company’s ability to continue as a going concern. These financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

The financial statements included in this filing of the Big Tomato do not include any adjustments that may be necessary if we are unable to continue as a going concern.

Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements.

Critical Accounting Policies and Estimates

Revenue Recognition

The Tomato derives the majority of its revenue from the sale of hydroponic and indoor garden supplies at its retail store, in which the products are delivered to the customer immediately. The Company also has an online store, but there are minimal e-commerce sales. The Company recognizes revenue, net of sales tax, when persuasive evidence of an arrangement exists, services have been rendered, the sales price is fixed or determinable, and collectability is reasonably assured which is typically when the customer takes possession of the merchandise at the point of sale, or if from the online store, when title transfers upon shipment from the Company’s warehouse. The Tomato is not in the practice of taking cash payments in advance from customers for inventory yet to be exchanged, but in such an event, the Tomato would recognize the amount received as deferred revenue in the accompanying Balance Sheets until the sale or service is complete.

Stock-based Compensation

The Company accounts for the grant of stock awards in accordance with ASC 718, “Compensation-Stock Compensation.” ASC 718 requires companies to recognize in the statement of operations the grant-date fair value of stock based compensation. Pursuant to ASC Topic 505-50 for share-based payments to consultants and other third-parties, compensation expense is determined at the “measurement date.” The expense is recognized over the vesting period of the award. Until the measurement date is reached, the total amount of compensation expense remains uncertain. The Company records compensation expense based on the fair value of the award at the reporting date. The awards to consultants and other third-parties are then revalued, or the total compensation is recalculated, based on the then current fair value, at each subsequent reporting date.

Inventories

Inventories are stated at the lower of cost or market. Cost is determined on average cost basis. Market is determined based on net realizable value. Appropriate consideration is given to obsolescence, excessive levels, deterioration, and other factors in evaluating net realizable value. Periodic inventory counts are performed in order to reconcile physically present inventory at the warehouse and retail store to the inventory listing.

Depreciation

Equipment is stated at cost and is depreciated on a straight-line basis over their estimated useful lives, as follows:

Furniture and equipment	5 years
Leasehold improvements	3 years
Software and website	3 years
Vehicles	7 years

Property and equipment is presented net of accumulated depreciation in the accompanying Balance Sheets.

Use of Estimates

The preparation of consolidated financial statements in accordance with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses in the reporting period. The Company regularly evaluates estimates and assumptions related to the recoverability of intangible assets, stock-based compensation, and deferred income tax asset valuation allowances. The Company bases its estimates and assumptions on current facts, historical experience and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by the Company may differ materially and adversely from the Company’s estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected.

Item 7A. Quantitative and Qualitative Disclosures about Market Risk.

Smaller reporting companies are not required to provide the information required by this item.

Item 8. Financial Statements.

The Big Tomato, Inc.

(f/k/a Jeremy N. Stout, Inc. d/b/a The Big Tomato)

Financial Statements

(Expressed in US dollars)

For the Years Ended December 31, 2014 and 2013

Report of Independent Registered Public Accounting Firm	F-1

Balance Sheets		F-2

Statements of Operations		F-3

Statements of Stockholders’ Equity (Deficit)		F-4

Statements of Cash Flows		F-5

Notes to the Financial Statements		F-6

Report of Independent Registered Public Accounting Firm

To the Board of Directors and

Stockholders of The Big Tomato Inc.(f/k/a Jeremy N. Stout, Inc. dba The Big Tomato)

We have audited the accompanying balance sheets of Jeremy N. Stout Inc. dba The Big Tomato as of December, 2014 and 2013, and the related statements of operations, stockholders’ equity (deficit), and cash flows for each of the years then ended. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, based on our audits, the financial statements referred to above present fairly, in all material respects, the financial position of The Big Tomato, Inc. (f/k/a Jeremy N. Stout dba The Big Tomato) as of December 31, 2014 and 2013, and the results of its operations and its cash flows for each of the years then ended, in conformity with accounting principles generally accepted in the United States of America.

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the financial statements, the Company is dependent upon the continued financial support from its management and or other sources, which raises substantial doubt about its ability to continue as a going concern. Management's plans in regard to this matter are also described in Note 1. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

/s/MaloneBailey, LLP

www.malone-bailey.com

Houston, Texas

March 31, 2015

F-1

The Big Tomato, Inc.

(f/k/a Jeremy N. Stout, Inc. d/b/a The Big Tomato)

Balance Sheets

(Expressed in US dollars)

	December 31, 2014 $			December 31, 2013 $

ASSETS

Current Assets
Cash		13,018			41,522
Inventory		277,610			142,946
Prepaid expenses and deposits		5,326			5,265
Total Current Assets		295,954			189,733
Property and equipment		7,289			15,679
Total Assets		303,243			205,412

LIABILITIES

Current Liabilities
Accounts payable and accrued liabilities		254,330			184,001
Accounts payable – related party		25,538			–
Loans payable to related parties		42,656			–
Total Liabilities		322,524			184,001

STOCKHOLDERS’ EQUITY (DEFICIT)

Common Stock:
Authorized: 50 shares
Issued and outstanding: 50 shares		5,000			5,000
Additional paid-in capital		5,459			5,459
Retained earnings		(29,740	)		10,952
Total Stockholders’ Equity (Deficit)		(19,281	)		21,411
Total Liabilities and Stockholders’ Equity (Deficit)		303,243			205,412

(The accompanying notes are an integral part of these financial statements)

F-2

The Big Tomato, Inc.

(f/k/a Jeremy N. Stout, Inc. d/b/a The Big Tomato)

Statements of Operations

(Expressed in US dollars)

	Year Ended December 31, 2014 $			Year Ended December 31, 2013 $

Revenue		3,017,356			2,460,261
Cost of sales		(2,229,345	)		(1,906,466	)
Gross Profit		788,011			553,795

Operating Expenses
Advertising		20,443			11,027
Depreciation		8,390			14,344
Insurance		46,146			44,673
General and administrative		94,755			115,879
Professional fees		23,394			21,769
Rent		116,036			113,514
Wages		288,147			292,691
Total Operating Expenses		(597,311	)		(613,897	)

Income (Loss) Before Other Items		190,700			(60,102	)
Other Items
Interest expense		(246	)		(33	)
Loss on disposal of equipment		–			(1,165	)
Net Income (Loss)		190,454			(61,300	)

Net Income (Loss) per Share – Basic and Diluted		3,809			(1,226	)

Weighted Average Shares Outstanding – Basic and Diluted		50			50

(The accompanying notes are an integral part of these financial statements)

F-3

The Big Tomato, Inc.

(f/k/a Jeremy N. Stout, Inc. d/b/a The Big Tomato)

Statements of Stockholders’ Equity (Deficit)

(Expressed in US dollars)

					Additional Paid-in		Retained Earnings (Accumulated
	Shares		Amount		Capital		Deficit)			Total
	#		$		$		$			$

Balance, December 31, 2012		50		5,000		5,459		128,519			138,978
Distribution		–		–		–		(56,267	)		(56,267	)
Net loss for the year		–		–		–		(61,300	)		(61,300	)
Balance, December 31, 2013		50		5,000		5,459		10,952			21,411
Distribution		–		–		–		(231,146	)		(231,146	)
Net income for the year		–		–		–		190,454			190,454
Balance, December 31, 2014		50		5,000		5,459		(29,740	)		(19,281)

(The accompanying notes are an integral part of these financial statements)

F-4

The Big Tomato, Inc.

(f/k/a Jeremy N. Stout, Inc. d/b/a The Big Tomato)

Statements of Cash Flows

(Expressed in US dollars)

	Year Ended December 31, 2014 $			Year Ended December 31, 2013 $

Operating Activities
Net income (loss)		190,454			(61,300	)
Adjustments to reconcile net income (loss) to net cash used in operating activities:
Depreciation		8,390			14,344
Disposal of equipment		–			1,165
Changes in operating assets and liabilities:
Prepaid expenses and deposits		(61	)		9,717
Inventory		(134,664	)		71,933
Accounts payable and accrued liabilities		70,485			64,125
Accounts payable – related parties		25,538			–
Net Cash Provided by Operating Activities		160,142			99,984

Investing Activities
Purchase of equipment		–			(3,220	)
Net Cash Used in Investing Activities		–			(3,220	)

Financing Activities
Distribution		(231,146	)		(56,267	)
Loans payable to related parties		42,500			–
Net Cash Used in Financing Activities		(188,646	)		(56,267	)
(Decrease) Increase in Cash		(28,504	)		40,497
Cash – Beginning of Year		41,522			1,025
Cash – End of Year		13,018			41,522

Supplemental Disclosures:
Interest paid		–			–
Income tax paid		–			–

(The accompanying notes are an integral part of these financial statements)

F-5

1.	Nature of Operations

Jeremy N. Stout, Inc. (d/b/a The Big Tomato) (the “Company”), a subchapter S Corporation, was incorporated in the state of Colorado on February 20, 2001. The Company is an established Denver area store, warehouse distribution facility, and online hydroponics and indoor garden supplier.

During the year ended December 31, 2014 and 2013, the Company paid net distributions to the two principal shareholders of the Company of $231,146 and $56,267. Contributions from the shareholders consist of assets provided to the Company, and distributions are provided to the shareholders of the Company when there is excess cash available.

Going Concern

These financial statements have been prepared on a going concern basis, which implies that the Company will continue to realize its assets and discharge its liabilities in the normal course of business. The continuation of the Company as a going concern is dependent upon the continued financial support from its management or others, and its ability to identify future investment opportunities and obtain the necessary debt or equity financing, and generating profitable operations from the Company’s future operations.

Effective January 1, 2015, the Tomato merged with Monarch America, Inc, which had a working capital deficit of $53,979, and had an accumulated deficit of $824,488. Monarch Parent recognized no additional revenue in December 2014.

Management is currently seeking out other opportunities to execute consulting arrangements with grow facilities. Large warehouse grow operations would require large supply orders, which would be fulfilled by the Tomato. Monarch is also seeking out other sources for financing and other partners to invest into the company.

2.	Summary of Significant Accounting Policies

(a)

Basis of Presentation

These financial statements and related notes are presented in accordance with accounting principles generally accepted in the United States, and are expressed in U.S. dollars. The Company’s fiscal year-end is December 31.

These financial statements are being furnished in the Form 10K of Monarch America Inc. (“Monarch”), as The Big Tomato, Inc. is the predecessor company upon completion of the Plan of Merger with Monarch (Note 8(a)).

F-6

(b)

Use of Estimates

The preparation of financial statements in accordance with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses in the reporting period. The Company regularly evaluates estimates and assumptions related to the recoverability of property and equipment, and deferred income tax asset valuation allowances. The Company bases its estimates and assumptions on current facts, historical experience and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by the Company may differ materially and adversely from the Company’s estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected.

(c)

Cash and Cash Equivalents

The Company considers all highly liquid instruments with maturity of three months or less at the time of issuance to be cash equivalents.

(d)

Inventories

Inventories are stated at the lower of cost or market and consist only of finished goods. Cost is determined on average cost basis. Market is determined based on net realizable value. Appropriate consideration is given to obsolescence, excessive levels, deterioration, and other factors in evaluating net realizable value.

(e)

Property and Equipment

Equipment is stated at cost and is depreciated on a straight-line basis over their estimated useful lives, as follows:

Furniture and equipment	5 years
Leasehold improvements	3 years
Software and website	3 years
Vehicles	7 years

(f)

Long-lived Assets

In accordance with ASC 360, “Property Plant and Equipment”, the Company tests long-lived assets or asset groups for recoverability when events or changes in circumstances indicate that their carrying amount may not be recoverable. Circumstances which could trigger a review include, but are not limited to: significant decreases in the market price of the asset; significant adverse changes in the business climate or legal factors; accumulation of costs significantly in excess of the amount originally expected for the acquisition or construction of the asset; current period cash flow or operating losses combined with a history of losses or a forecast of continuing losses associated with the use of the asset; and current expectation that the asset will more likely than not be sold or disposed significantly before the end of its estimated useful life. Recoverability is assessed based on the carrying amount of the asset and its fair value which is generally determined based on the sum of the undiscounted cash flows expected to result from the use and the eventual disposal of the asset, as well as specific appraisal in certain instances. An impairment loss is recognized when the carrying amount is not recoverable and exceeds fair value.

F-7

(g)

Revenue Recognition

The Company derives the majority of its revenue from the sale of hydroponic and indoor garden supplies at its retail store, in which the products are delivered to the customer immediately. The Company also has an online store, but there are minimal e-commerce sales. The Company recognizes revenue, net of sales tax, when persuasive evidence of an arrangement exists, services have been rendered, the sales price is fixed or determinable, and collectability is reasonably assured which is typically when the customer takes possession of the merchandise at the point of sale, or if from the online store, when title transfers upon shipment from the Company’s warehouse.

(h)

Shipping and Handling

The cost of shipping and handling is included in cost of sales and was $1,227 (2013 - $2,119) during the year ended December 31, 2014.

(i)

Income Taxes

The Company accounts for income taxes using the asset and liability method in accordance with ASC 740, “Income Taxes”. The asset and liability method provides that deferred tax assets and liabilities are recognized for the expected future tax consequences of temporary differences between the financial reporting and tax bases of assets and liabilities, and for operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using the currently enacted tax rates and laws that will be in effect when the differences are expected to reverse. The Company records a valuation allowance to reduce deferred tax assets to the amount that is believed more likely than not to be realized.

The Big Tomato, Inc. operated as an S-Corp in fiscal year 2014; whereby it was not subject to income taxes and its income was passed directly to its owners, Messrs. Stout and Field, who were ultimately responsible for the tax liability and its payment on their own personal tax returns. The net differences between the tax bases and the reported amounts of the Tomato’s assets and liabilities reported in these financial statements are not significant.

As a result of Monarch America’s acquisition of Jeremy Stout Inc., The Big Tomato, Inc. (a C-corp) was formed and Jeremy Stout, Inc. was absorbed by The Big Tomato, Inc. through a reverse merger effective January 1, 2015. As a C-corp, The Big Tomato’s profits will roll up to Monarch America’s consolidated financial results and will be reported to the IRS on a consolidated Monarch America tax return. The results of this structure change has no material impact on the Tomato’s 2014 financial results.

(j)

Earnings (Loss) Per Share

The Company computes earnings (loss) per share in accordance with ASC 260, “Earnings per Share”. ASC 260 requires presentation of both basic and diluted earnings per share (“EPS”) on the face of the income statement. Basic EPS is computed by dividing earnings (loss) available to common shareholders (numerator) by the weighted average number of shares outstanding (denominator) during the period. Diluted EPS gives effect to all dilutive potential common shares outstanding during the period using the treasury stock method and convertible preferred stock using the if-converted method. In computing diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options or warrants. Diluted EPS excludes all dilutive potential shares if their effect is anti-dilutive.

F-8

(k)

Financial Instruments and Fair Value Measures

ASC 820, “Fair Value Measurements and Disclosures”, requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820 establishes a fair value hierarchy based on the level of independent, objective evidence surrounding the inputs used to measure fair value. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. ASC 820 prioritizes the inputs into three levels that may be used to measure fair value:

Level 1

Level 1 applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities.

Level 2

Level 2 applies to assets or liabilities for which there are inputs other than quoted prices that are observable for the asset or liability such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data.

Level 3

Level 3 applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities.

The Company’s financial instruments consist principally of cash, accounts payable and accrued liabilities, and loans payable to related parties. Pursuant to ASC 820, the fair value of cash is determined based on “Level 1” inputs, which consist of quoted prices in active markets for identical assets. The recorded values of all other financial instruments approximate their current fair values because of their nature and respective maturity dates or durations.

(l)

Recent Accounting Pronouncements

The Company has implemented all new accounting pronouncements that are in effect and that may impact its financial statements and does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations.

3.	Property and Equipment

	Cost $		Accumulated Depreciation $		December 31, 2014 Net Carrying Value $		December 31, 2013 Net Carrying Value $

Furniture and equipment		57,938		52,320		5,618		12,384
Leasehold Improvements		24,747		24,747		–		–
Software and website		34,191		34,191		–		168
Vehicles		11,493		9,822		1,671		3,127
Total		128,369		121,080		7,289		15,679

(a) During the year ended December 31, 2013, the Company disposed of computer equipment with a net book value of $1,165 for no proceeds, resulting in a loss on disposal of equipment of $1,165.

F-9

4.	Related Party Transactions

	(a)	During the years ended December 31, 2014 and 2013, the Company paid or accrued management fees of $120,002 and $119,373 to the two principal shareholders of the Company.

	(b)	During the years ended December 31, 2014 and 2013, the Company paid net distributions to the two principal shareholders of the Company of $231,146 and $56,267.

	(c)	In November and December of 2014, the Company purchased inventory (a growing medium called Coco Coir), from Monarch America, Inc, for a total of $25,538 in cost.

5.	Loans Payable to Related Parties

	(a)	On November 11, 2014, the Company entered issued a $30,000 secured promissory note to Monarch America, Inc. (“Monarch”), with whom the Company completed a Plan of Merger subsequent to year end (Note 9(a)), which bears interest at 10% per annum and matures on December 31, 2015. At December 31, 2014, the Company recognized accrued interest of $156. The loan was repaid in February 2015.

	(b)	During the year ended December 31, 2014, the Company received an advance of $12,500 from Green Sky Inc., a company controlled by a significant shareholder of Monarch America, which is unsecured, noninterest-bearing and due on demand. The loan was repaid in March of 2015.

6.	Commitments

	a)	The Company entered into a lease for office premises which originally commenced April 2, 2007. On October 27, 2010 and November 1, 2013, the Company entered into amendment agreements to extend the term of the lease. Under the terms of the November 1, 2013 amendment agreement, the term was extended to October 31, 2018, and the Company must pay base rent of $25,600 in the first 2 years of the lease, $27,200 in the next 2 years of the lease, and $28,800 in the last year of the lease.

	b)	The Company entered into a Shopping Center Lease Agreement which commenced April 1, 2014, and terminates on March 31, 2019. The minimum base rent due under the lease agreement is $5,235 per month for the first year, $5,413 per month for the second year, and $5,568 per month for the remaining term.

	c)	Total lease commitments based on the minimum base rent due over the next five years are as follows:

2015	$	90,289
2016		93,551
2017		94,283
2018		90,816
2019		16,704

Total	$	385,643*

* The total lease commitments above do not include the common area maintenance charges.

F-10

7.	Subsequent Events

We have evaluated subsequent events through March 30, 2015, and did not have any material recognizable subsequent events with the exception of the following:

	a)	On January 6, 2015, Monarch America, Inc. provided The Big Tomato, Inc. with a working capital infusion of $80,000 for the purpose of enhancing the Tomato’s ability of fulfilling larger orders.

	b)	On January 14, 2015, the Company completed a Plan of Merger with Monarch America, Inc. (“MAI”) (formerly Cannabis Kinetics Corp.), a Nevada corporation, whereby MAI acquired all of the outstanding shares of the Company in consideration for cash of $400,000, promissory notes of $2,000,000 and 8,100,000 post-split shares of restricted common stock of MAI. Each note will be payable in eight equal installments of $125,000 plus interest at 8% per annum. Each note will be secured by all of the assets of the Company and the shares of the Company.

	c)	On January 14, 2015, the Company entered into a two-year employment agreement (the “Employment Agreement”) with each of Jeremy N. Stout and Josh Field for an annual base salary of $120,000 each. Each individual will also be entitled to a bonus based upon the Company’s annual net revenues for 2015 and 2016 as follows: (i) $2,500 for every $10,000 of net income generated between $400,000 and $460,000, and (ii) $15,000 plus 7.5% of net income over $460,000. The agreement prohibits the individuals from competing with the business of the Company during the term of the agreement and for one year thereafter, except if the employee is terminated without cause or as a result of a constructive termination.

9.	Pro Forma Information (Unaudited)

Presented on this and the subsequent page are the Pro Forma Consolidated financial results of Monarch America, Inc and The Big Tomato, Inc.

F-11

Jeremy N. Stout, Inc.

(d/b/a The Big Tomato)

Unaudited Pro Forma Consolidated Balance Sheet

As at December 31, 2014

(Expressed in U.S. dollars)

	Pro Forma
	Consolidated $

ASSETS

Current assets
Cash		45,501
Inventory		277,610
Prepaid expenses and deposits		7,826
Total Current Assets		330,937

Property and equipment, net		7,289
Note Receivable – related party		27,030

Total Assets		365,256

LIABILITIES

Current liabilities
Accounts payable and accrued liabilities		368,830
Loan payable		12,500
Promissory note payable – current portion		1,400,000

Total Current Liabilities		1,781,330

Promissory note payable		1,000,000

Total Liabilities		2,781,330

STOCKHOLDERS’ (DEFICIT) EQUITY

Preferred stock
Series A preferred stock		275
Series B preferred stock		35
Common stock		101,905
Additional paid-in capital		(2,488,549	)
Retained earnings (deficit)		(29,740	)

Total Stockholders’ (Deficit) Equity		(2,416,074	)

Total Liabilities and Stockholders’ (Deficit) Equity		365,256

F-12

Jeremy N. Stout, Inc.

(d/b/a The Big Tomato)

Unaudited Pro Forma Consolidated Statement of Operations

Year Ended December 31, 2014

(Expressed in U.S. dollars)

	Pro Forma
	Consolidated
	$


Revenue		3,046,294
Cost of sales		(2,266,166	)
Gross Profit		780,128

Operating Expenses
Advertising		20,443
Depreciation		8,390
Insurance		46,146
General and administrative		687,371
Impairment of intangible assets		133,500
Professional fees		23,394
Rent		116,036
Wages		288,147
Total Operating Expenses		(1,323,427	)

Net Income (Loss)		(543,299	)

Less: Cumulative dividends on Series B preferred stock		(5,417	)
Net Loss		(548,716	)

F-13

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.

On June 2, 2014, the Company terminated Sadler, Gibb & Associates, LLC ("Sadler Gibb") as its independent registered public accounting firm and on May 30, 2014, retained MaloneBailey, LLP (“MaloneBailey”) as its principal independent accountants.

The Termination of Sadler Gibb

Sadler Gibb was the independent registered public accounting firm for Monarch America, Inc. (formerly Lingas Ventures, Inc.)(formerly Cannabis Kinetics, Inc.) from February 1, 2013 until June 2, 2014. None of Sadler Gibb's reports on the Company’s financial statements for the year ended November 30, 2013 or for the year ended November 30, 2012(a) contained an adverse opinion or disclaimer of opinion, or (b) was modified as to uncertainty, audit scope, or accounting principles, or (c) contained any disagreements on any matters of accounting principles or practices, financial statement disclosure, or auditing scope or procedures, which disagreements, if not resolved to the satisfaction of Sadler Gibb, would have caused it to make reference to the subject matter of the disagreements in connection with its reports. None of the reportable events set forth in Item 304(a)(1)(iv) of Regulation S-K occurred during the period in which Sadler Gibb served as the Company’s principal independent accountants.

During our two most recent fiscal years and the subsequent interim period preceding the termination of Sadler Gibb we had no disagreements with the firm on any matter of accounting principles or practices, financial statement disclosure, or auditing scope of procedure which disagreement if not resolved to the satisfaction of Sadler Gibb would have caused it to make reference to the subject matter of the disagreement in connection with its report.

However, the report of Sadler Gibb dated March 13, 2014 on our financial statements for November 30, 2013 and 2012 and the related statements of operations, stockholders’ equity (deficit), and cash flows for the years then ended and for the cumulative period from September 14, 2010 (date of inception) through November 30, 2013 in the Annual Report on Form 10-K contained an explanatory paragraph which noted that there was substantial doubt as to our ability to continue as a going concern. Sadler Gibb has not provided any audit services in relation to the standalone financial statements of The Big Tomato, Inc.

The Engagement of MaloneBailey

Prior to May 30, 2014, the date that MaloneBailey was retained as the principal independent accountants of the Company:

(1) The Company did not consult MaloneBailey regarding either the application of accounting principles to a specified transaction, either completed or proposed, or the type of audit opinion that might be rendered on Company’s financial statements;

(2) Neither a written report nor oral advice was provided to the Company by MaloneBailey that they concluded was an important factor considered by the Company in reaching a decision as to the accounting, auditing or financial reporting issue; and

(3) The Company did not consult MaloneBailey regarding any matter that was either the subject of a “disagreement” (as defined in Item 304(a)(1)(iv) of Regulation S-K and the related instructions) or any of the reportable events set forth in Item 304(a)(1)(v) of Regulation S-K.

Item 9A. Controls and Procedures

EVALUATION OF DISCLOSURE CONTROLS

Under the supervision and with the participation of our management, who is also our principal executive officer and principal financial officer, we conducted an evaluation of our disclosure controls and procedures, as such term is defined under Rule 13a-15(e) and Rule 15d-15(e) promulgated under the Securities Exchange Act of 1934, as amended, as of December 31, 2014. Based upon such evaluation, the Company's Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were not effective, as of December 31, 2014, to provide assurance that information that is required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized, and reported, within the time periods specified by the SEC's rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the Company's management, including its Chief Executive Officer and Chief Financial Officer, or persons performing similar functions, as appropriate, to allow timely decisions regarding required disclosure.

MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

Management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting. As defined in Rules 13a-15(f) under the Securities Exchange Act of 1934, internal control over financial reporting is a process designed by, or under the supervision of, the Company’s principal executive, principal operating and principal financial officers, or persons performing similar functions, and effected by the Company’s board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America.

The Company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records, that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the Company’s assets; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of the Company’s management and directors; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Our management, including our chief executive officer and chief financial officer, assessed the effectiveness of our internal control over financial reporting at December 31, 2014. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control—Integrated Framework. Based on that assessment under those criteria, management has determined that, as of December 31, 2014, our internal control over financial reporting was not effective, because of the material weakness described below.

A material weakness is a control deficiency, or combination of control deficiencies, that results in more than a remote likelihood that a material misstatement of the annual or interim financial statements will not be prevented or detected. Given the limited number of personnel responsible for accounting for and managing transaction and funds in the company, there is an inherent limitation to segregation of duties. Moreover, there are a limited number of qualified accounting personnel involved in the financial close process and the Company has been unable to maintain adequate control activities or monitoring processes.

This annual report does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting. Management's report was not subject to attestation by the Company's registered public accounting firm pursuant to the exemption provided to issuers that are not “large accelerated filers” nor “accelerated filers” under the Dodd-Frank Wall Street Reform and Consumer Protection Act.

Changes in Internal Control over Financial Reporting

There have been no changes in our internal control over financial reporting that occurred during our last fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Item 9B. Other Information.

Change in Fiscal Year

As a result of the consummation of the merger of The Big Tomato by the Company, the fiscal year of the Company is December 31^st. Accordingly, in addition to the previous Form 10-K filing for the year ended November 30, 2014 without regard to the Merger, the Company is filing this Annual Report for the fiscal year ended December 31, 2014 with the stand-alone financial statements of The Big Tomato.

PART III

Item 10. Directors, Executive Officers and Corporate Governance.

Directors and Executive Officers

Set forth below are the names, ages and present principal occupations or employment, and material occupations, positions, offices or employments for the past five years of our current director and executive officers.

Name	Age	Position

Eric Hagen	31	President, Chief Executive Officer and Director

Jonathan Hunt	41	Vice President, Treasurer and Secretary

Jeremy Stout	37	Vice President, The Big Tomato

Josh Field	41	Vice President, The Big Tomato

Eric Hagen, our president, chief executive officer and a director since March 2014, has been a Marketing Manager at Classified Verticals since October 2013. From January 2012 through December 2012, he was a Sales Manager at Western Agency. Mr. Hagen was an Advertising agent for DEX Media Corporation from March 2008 through June 2011.

Jonathan Hunt, our vice president, treasurer, secretary and a director since March 2014, has been an electrician for the IBEW since 1998. Mr. Hunt is considered the Company’s cultivation expert with over 9 years of experience in grow operations, proprietary hydroponic design, and facility mechanics.

Jeremy Stout and Josh Field were the founding members of The Big Tomato, Inc., and came aboard Monarch America as part of Monarch’s acquisition of the Tomato. Messrs. Stout and Field both have over 15 years of wholesale and retail store operations, and consulting and providing trusted advice for hydroponic processes.

Each director of the Company serves for a term of one year or until the successor is elected at the Company's annual stockholders’ meeting and is qualified, subject to removal by the Company's stockholders. Each officer serves, at the pleasure of the board of directors, for a term of one year and until the successor is elected at the annual meeting of the board of directors.

There are no familial relationships among any of our officers or directors. None of our directors or officers is a director in any other reporting companies. None of our directors or officers has been affiliated with any company that has filed for bankruptcy within the last ten years. The Company is not aware of any proceedings to which any of the Company’s officers or directors, or any associate of any such officer or director, is a party adverse to the Company or has a material interest adverse to the Company.

Code of Ethics; Financial Expert

Because of the small size and limited resources of the Company, we do not currently have a Code of Ethics applicable to our principal executive, financial and accounting officers. We do not have a “financial expert” on the board or an audit committee or nominating committee.

Potential Conflicts of Interest

Since we do not have an audit or compensation committee comprised of independent directors, the functions that would have been performed by such committees are performed by our directors. Thus, there is a potential conflict of interest in that our directors and officers have the authority to determine issues concerning management compensation and audit issues that may affect management decisions. We are not aware of any other conflicts of interest with any of our executives or directors.

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Securities Exchange Act of 1934 requires executive officers and directors of the Company and persons who own more than 10% of a registered class of the Company's equity securities to file reports of ownership and changes in their ownership with the Securities and Exchange Commission, and forward copies of such filings to the Company. Our executive officers and directors complied with the Section 16(a) filing requirements since they acquired control of the Company.

Involvement in Certain Legal Proceedings

There are no legal proceedings that have occurred within the past ten years concerning our directors, or control persons which involved a criminal conviction, a criminal proceeding, an administrative or civil proceeding limiting one's participation in the securities or banking industries, or a finding of securities or commodities law violations.

Item 11. Executive Compensation.

Summary Compensation

The following table provides certain information regarding compensation awarded to, earned by or paid to persons serving as our Chief Executive Officer during fiscal 2014 and 2013 and the only other current active officer, Jonathan Hunt, for fiscal 2014 or 2013 (each a “named executive officer”). The former officers of the then named Lingas Ventures, Inc. are also included for completeness.

Summary Compensation Table

Name and Principal Position	Fiscal Year Ended 12/31	Salary Paid($)		Bonus ($)		Stock Awards ($)		Option Awards ($)		All Other Compensation ($)		Total ($)
Eric Hagen CEO and President	2013 2014		0 67,225		0 0		0 425		0 0		0 0		0 67,650

Jonathan Hunt Vice President, Treasurer and Secretary	2013 2014		0 39,000		0 0		0 425		0 0		0 0		0 39,425

John Ngitew	2013 2014		0 0		0 0		0 0		0 0		0 0		0 0

Grace Parinas	2013 2014		0 0		0 0		0 0		0 0		0 0		0 0

From incorporation through March 19, 2014, John Ngitew and Grace Parinas were the principal shareholders and Mr. Ngitew was the principal executive officer.

The stock awards granted to Eric Hagen and Jonathan Hunt related to a management fee arrangement pursuant to which the officers were entitled to monthly compensation of $7,500 in cash and $7,500 in stock. The officers waived this arrangement going forward effective September 2014.

We have no pension, health, annuity, bonus, insurance, stock option, profit sharing or similar benefit plans.

Employment Agreements

Monarch has a consulting arrangement with Robert Matuszewski, the former owner of REM International, LLC, in which he is paid $3,000 per month, which is up for renewal in July 2015.

In connection with the closing of the acquisition of The Big Tomato, the Company entered into a two-year employment agreement, effective as of January 1, 2015 (the “Employment Agreement”), with each of Jeremy N. Stout and Josh Field to serve as Vice President-Sales and Distribution and Vice President-Operations, respectively, for an annual base salary of $120,000, to be paid in equal biweekly installments. Each employee will also be entitled to the following bonus based upon the annual net income of The Big Tomato, Inc. for 2015 and 2016: (i) $2,500 for every $10,000 of net income generated between $400,000 and $460,000, and (ii) $15,000 plus 7.5% of net income over $460,000. In the event the agreement is terminated by the employer without “cause” or by the employee as a result of “constructive termination” (as such terms are defined in the agreement), the employee will receive a bonus based upon the aforesaid net income notwithstanding termination of his agreement. The agreement also provides that the employer pay health insurance premiums for the employee and his family (including SIS supplemental insurance), automobile and gas expenses of $1,000 per month and communication expenses of $500 per month.

Neither Messrs. Hagen nor Hunt, our current officers, have any employment agreement or arrangement with the Company.

In January 2015 Monarch retained the services of Robert Shepherd as the Native American Relations Officer to introduce the Company to the Native American community. Mr. Shepherd is entitled to $5,000 in shares, based on the volume weighted average for 20 days and $1,500 in cash for each month he remains in this position. If Monarch executed a revenue generating agreement with an Indian tribe, he shall be entitled to monthly compensation of $5,500 in shares of common stock and $5,500 in cash. Mr. Shepherd received $10,000 worth of stock, and is entitled to $3,000 per conference he attends plus $500 traveling expenses.

Outstanding Equity Awards

We have not granted any equity awards to any named executive officer.

Compensation of Directors

Since our incorporation, no compensation has been paid to any of our directors in consideration for their services rendered in their capacity as directors. No arrangements are presently in place regarding compensation to directors for their services as directors.

Compensation of Officers

Eric Hagen and Jonathan Hunt are the only officers of the company. They received no additional compensation outside of what is outlined above.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.

The following table lists, as of March 30, 2015, the number of shares of common stock of Monarch America that are beneficially owned by (i) each person or entity known to our Company to be the beneficial owner of more than 5% of the outstanding common stock; (ii) each executive officer and director of our Company; and (iii) all executive officers and directors as a group. Information relating to beneficial ownership of common stock by our principal shareholders and management is based upon information furnished by each person using “beneficial ownership” concepts under the rules of the Securities and Exchange Commission. Under these rules, a person is deemed to be a beneficial owner of a security if that person has or shares voting power, which includes the power to vote or direct the voting of the security, or investment power, which includes the power to vote or direct the voting of the security. The person is also deemed to be a beneficial owner of any security of which that person has a right to acquire beneficial ownership within 60 days. Under the Securities and Exchange Commission rules, more than one person may be deemed to be a beneficial owner of the same securities, and a person may be deemed to be a beneficial owner of securities as to which he or she may not have any pecuniary beneficial interest. Except as noted below, each person has sole voting and investment power.

The percentages below are calculated based on 104,904,618 shares of our common stock issued and outstanding as of March 30, 2015. We do not have any outstanding options, warrants or other securities exercisable for or convertible into shares of our common stock. Unless otherwise indicated, the address of each person listed is c/o Monarch America, Inc., 1150 W. Custer Place, Denver, Colorado 80223.

Name of Beneficial Owner	Amount and Nature of Beneficial Ownership			Percent of Class

Eric Hagen		14,533,200	(1)		13.9	%

Jonathan Hunt		14,533,200	(2)		13.9	%

Steven Brandt		11,233,200	(3)		10.7	%

Jeremy Stout		4,050,000	(4)		3.9	%

Josh Field		4,050,000	(4)		3.9	%

Directors and officers as a group (4 persons)		37,166,400			35.4	%

(1) In addition to the shares indicated above, Eric Hagen owns 91,666 shares of Series A Convertible Preferred Stock (each share of preferred stock votes on a 600 to 1 basis). Mr. Hagen also has the right to vote an additional 11,233,200 shares of common stock and 91,666 shares of Series A Convertible Preferred Stock as a result of the proxy granted to him from Mr. Brandt.

(2) In addition to the shares indicated above, Jonathan Hunt owns 91,666 shares of Series A Convertible Preferred Stock (each share of preferred stock votes on a 600 to 1 basis). Mr. Hunt also has the right to vote an additional 11,233,200 shares of common stock and 91,666 shares of Series A Convertible Preferred Stock as a result of the proxy granted to him from Mr. Brandt.

(3) Steven Brandt also owns 91,666 shares of Series A Convertible Preferred Stock (each share of preferred stock votes on a 600 to 1 basis). Upon his resignation as an officer and director of the Company in January 2015, Mr. Brandt granted a proxy to each of Messrs. Hagen and Hunt, granting them the right to vote his 11,233,200 shares of common stock and 91,666 shares of Series A Convertible Preferred Stock.

(4) Each of the named individuals have a pledge on all the shares of The Big Tomato owned by the Company and a first priority lien on all the assets of The Big Tomato as security for the secured promissory notes in the principal amount of $1,000,000 owed to each of said individuals.

Item 13. Certain Relationships and Related Transactions, and Director Independence.

Certain Relationships and Related Transactions

During the year ended November 30, 2013, Monarch received cash advances of $26,904 from the then acting President and Director of the Company and repaid $7,711 to the then acting President and Director of the Company. The 2013 President also paid $3,414 in expenses on behalf of the Company.

At November 30, 2014, Monarch owed $nil (2013 - $57,569) to the former President and Director of the Company. On March 19, 2014, the former President and Director of the Company forgave $57,569 of amounts owed to him in addition to assuming responsibility of all outstanding accounts payable and accrued liabilities of $11,108 pursuant to a Stock Exchange Agreement. The total liabilities forgiven and assigned of $68,677 have been recorded as additional paid-in capital.

On March 19, 2014, John Ngitew and Grace Parinas, the former principal shareholders of the Company f/k/a Lingas Ventures, Inc., entered into a Stock Purchase Agreement which provided for the sale of shares of common stock of the Company representing 50% of the issued and outstanding share capital of the Company on a fully-diluted basis to Eric Hagen, Jonathan Hunt and Steven Brandt. The consideration paid for the share was $21,750. In connection with the transaction, Mr. Ngitew released the Company from all debts owed to him. Effective as of March 19, 2014, in connection with the sale of the shares to Messrs. Hagen, Hunt and Brandt, both John Ngitew and Grace Parinas resigned from all their respective positions as officers and directors of the Company. The Board of Directors of the Company elected Eric Hagen as President and Chief Executive Officer, Jonathan Hunt as Vice President and Secretary and Steven Brandt as Vice President and Treasurer, and said three individuals became the directors of the Company. On May 1, 2014, Messrs. Hagen, Hunt and Brandt were issued 17,100 shares of common stock with a fair value of $57 in consideration for services performed.

On May 1, 2014, Messrs, Hagen, Hunt and Brandt, directors and officers of the Company, were issued 17,100 shares of common stock with a fair value of $57 in consideration for services performed.

On May 8, 2014, Messrs, Hagen, Hunt and Brandt, directors and officers of the Company were issued 45,000 shares of common stock with a fair value of $150 in consideration for services performed.

On June 20, 2014, Messrs, Hagen, Hunt and Brandt, directors and officers of the Company were issued 337,500 shares of common stock with a fair value of $1,125 in consideration for services performed.

On June 20, 2014, the Company entered into an exchange agreement pursuant to which Messrs, Hagen, Hunt and Brandt directors and officers of the Company agreed to convert an aggregate of $8,250 owed by the Company, for expenses paid on behalf of the Company, into 274,998 shares of Series A convertible preferred stock of the Company.

On June 26, 2014, Eric Hagen, Jonathan Hunt and Steve Brandt, each an officer and director of the Company at the time, were each issued 37,500 shares of common stock of the Company as compensation for services performed.

On August 15, 2014, the Company issued a Promissory Note to a company affiliated with Steve Brandt, an officer and director of the Company from March 2014 until his resignation in January 2015. Pursuant to the unsecured note, the Company agreed to lend up to an aggregate of $3,000,000, with bears interest at 8% per annum. The note matures on August 15, 2017. On August 21, 2014, the Company advanced $60,000 under the Promissory Note. During the year ended November 30, 2014, the borrower repaid $36,000 of principal. At November 30, 2014, the Company recognized accrued interest receivable of $1,030. The company evaluated the loan and determined that it was not a personal loan as defined by SOX 402 because the proceeds of the loan were used to pay for certain for licenses or intellectual property on behalf of Monarch America to facilitate the buildout of the warehouse.

On November 11, 2014, the Company entered issued a $30,000 secured promissory note to Monarch America, Inc. (“Monarch”), with whom the Company completed a Plan of Merger subsequent to year end (Note 9(a)), which bears interest at 10% per annum and matures on December 31, 2015. At December 31, 2014, the Company recognized accrued interest of $156. The loan was repaid in February 2015.

During the year ended December 31, 2014, the Company received an advance of $12,500 from Green Sky Inc., a company controlled by a significant shareholder of Monarch America, which is unsecured, noninterest-bearing and due on demand. The loan was repaid in March of 2015.

During the year ended November 30, 2014, the Company incurred management fees of $113,832 (2013 - $nil) to directors and officers of the Company, of which $1,332 was paid through the issuance of 399,600 shares of common stock (Note 7). During the year ended November 30, 2014, the directors and officers of the Company agreed to waive its claim to accrued management fees of $112,500, which was recognized in additional paid-in capital.

During the year ended November 30, 2014, the Company recognized revenue of $25,538 (2013 - $nil) from Jeremy N. Stout, Inc. (d/b/a The Big Tomato), with whom the Company completed a Plan of Merger subsequent to year end (Note 10). Included in accounts receivable at November 30, 2014, were amounts owed of $25,538 from The Big Tomato. These amounts are reflected as Related Party Accounts Payable in the accompanying financial statements of the Big Tomato and are still outstanding as of March 31, 2015.

On January 12, 2015, Mr. Steve Brandt resigned from his position as Director and Treasurer and Vice President of the Company. In connection with his resignation, Mr. Brandt gave a proxy to Eric Hagen and Jonathan Hunt, the two officers and directors of the Company, to vote all his 11,233,200 shares of common stock and 91,666 shares of Series A Convertible Preferred Stock (each share of preferred stock votes on a 600 to 1 basis). As a result of the grant of such proxy, each of Messrs. Hagen and Hunt currently have the right to vote an additional 56% of the Company and an additional 89% of the Company on a fully-diluted basis assuming the preferred stock was voting.

In connection with the closing of the acquisition of The Big Tomato, Inc., a Colorado corporation which is wholly-owned by Monarch, The Big Tomato entered into a two-year employment agreement, effective as of January 1, 2015 (the “Employment Agreement”), with each of Jeremy N. Stout and Josh Field to serve as Vice President-Sales and Distribution and Vice President-Operations, respectively, for an annual base salary of $120,000, to be paid in equal biweekly installments. Each employee will also be entitled to the following bonus based upon the annual net income of The Big Tomato, Inc. for 2015 and 2016: (i) $2,500 for every $10,000 of net income generated between $400,000 and $460,000, and (ii) $15,000 plus 7.5% of net income over $460,000. In the event the agreement is terminated by the employer without “cause” or by the employee as a result of “constructive termination” (as such terms are defined in the agreement), the employee will receive a bonus based upon the aforesaid net income notwithstanding termination of his agreement. The agreement also provides that the employer pay health insurance premiums for the employee and his family (including SIS supplemental insurance), automobile and gas expenses of $1,000 per month and communication expenses of $500 per month.

During the years ended December 31, 2014 and 2013, the Tomato paid or accrued management fees of $120,002 and $119,373, respectively, to the two principal shareholders of the Company, Messrs. Stout and Field.

During the years ended December 31, 2014 and 2013, the Tomato paid net distributions to the two principal shareholders of the Company, Messrs. Stout and Field, of $231,146 and $56,267, respectively.

Director Independence

We are not subject to listing requirements of any national securities exchange or national securities association and, as a result, we are not at this time required to have our board comprised of a majority of “independent directors.”

Item 14. Principal Accounting Fees and Services.

Our principal independent accountant is MaloneBailey LLP. Under previous management, SadlerGibb & Associates, LLC performed the audit of the then named Lingas Ventures, Inc. Their approved fees billed to Monarch are set forth below:

	Malone Bailey, LLP		SadlerGibb &Associates, LLC
	For Year Ended November 30,
	2014		2014		2013
Audit Fees	$	17,000	$	1,500	$	8,000
Audit Related Fees		48,500		1,500		0
Tax Fees		0		0		0
All Other Fees		0		0		0

As of December 31, 2014, the Company did not have a formal documented pre-approval policy for the fees of the principal accountant. The Company does not have an audit committee. The percentage of hours expended on the principal accountant's engagement to audit our financial statements for the most recent fiscal year that were attributed to work performed by persons other than the principal accountant's full-time, permanent employees was 0%.

PART IV

Item 15. Exhibits. Financial Statement Schedules.

Exhibit No.		Description

2.1		Plan and Agreement of Merger between Jeremy N. Stout, Inc. and Cannabis Kinetics, Inc. (1)
3.1		Certificate to Accompany Restated Articles or Amended and Restated Articles of Incorporation filed with the Secretary of State of the State of Nevada dated May 1, 2014 (2)
3.2		Bylaws of Lingas Resources, Inc. (3)
3.3		Certificate of Designation of Series B Convertible Preferred Stock (4)
3.4		Certificate of Designation of Series A Convertible Preferred Stock (5)
3.5		Articles of Merger dated December 16, 2014, between Cannabis Kinetics Corp. and Monarch America, Inc.(6)
10.1		Promissory Note executed by Monarch, Inc. to HBH Industries, Inc. (7)
10.2		Professional Relations and Consulting Agreement between Cannabis Kinetics Corp. and Acorn Management Partners LLC (7)
10.3		Asset Purchase Agreement, dated as of June 6, 2014 by and among Cannabis Kinetics Corp., REM International, LLC and Robert E. Matuszewski (8)
10.4		Exchange Agreement dated June 19, 2014 among Cannabis Kinetics Corp. and the signatories indicated therein (9)
10.8		Amendment to Asset Purchase Agreement, dated as of September 11, 2014, by and among Cannabis Kinetics Corp., REM International, LLC, a Colorado limited liability company, and Robert E. Matuszewski (10)
10.9		Exclusive Distributorship Agreement effective as of September 25, 2014 with Ivory Coco International, LLC (11)
		Promissory Note dated as of November 11, 2014 by The Big Tomato in favor of Cannabis Kinetics Corp. (12)
		Promissory Note dated as of December 5, 2014 by Cannabis Kinetics Corp. in favor of Glamis Capital SA (13)
10.10		Note Purchase Agreement dated as of December 5, 2014 by Cannabis Kinetics Corp. and Glamis Capital SA (13)
10.13		Amendment to Merger Agreement, dated January 1, 2015 by and between Monarch America, Inc. f/k/a Cannabis Kinetics Corp., Jeremy N. Stout, Inc., d/b/a The Big Tomato, The Big Tomato, Inc., a Colorado corporation and a wholly-owned subsidiary of Cannabis Kinetics Corp. and the shareholders of The Big Tomato, Inc. (1)
10.14		$1,000,000 Secured Promissory Note issued by Cannabis Kinetics Corp. to Jeremy N. Stout (1)
10.15		$1,000,000 Secured Promissory Note issued by Cannabis Kinetics Corp. to Josh Field(1)
10.16		Security Agreement, dated January 1, 2015 between The Big Tomato, Inc. and Jeremy N. Stout and Josh Field (1)
10.17		Stock Pledge Agreement, dated January 1, 2015 between Cannabis Kinetics Corp. and Jeremy N. Stout and Josh Field (1)
10.18		Employment Agreement, dated January 1, 2015, between The Big Tomato, Inc. and Jeremy N. Stout(1)
10.19		Employment Agreement, dated January 1, 2015, between The Big Tomato, Inc. and Josh Field (1)
31		Rule 13a-14(a)/15d-14(a) Certifications*
32		Section 1350 Certifications*

______________

*Filed herewith

(1)	Incorporated by reference to the corresponding exhibit number filed by the Company with the Securities and Exchange Commission on January 16, 2015 with the Current Report on Form 8-K dated January 14, 2015

(2)	Incorporated by reference to the corresponding exhibit number filed by the Company with the Securities and Exchange Commission on May 14, 2014 with the Current Report on Form 8-K dated May 16, 2014

(3)	Incorporated by reference to the corresponding exhibit number filed by the Company with the Securities and Exchange Commission on February 6, 2012 with the Registration Statement on Form S-1

(4)	Incorporated by reference to the corresponding exhibit number filed by the Company with the Securities and Exchange Commission on June 12, 2014 with the Current Report on Form 8-K dated June 10, 2014

(5)	Incorporated by reference to the corresponding exhibit number filed by the Company with the Securities and Exchange Commission on June 26, 2014 with the Current Report on Form 8-K dated June 23, 2014

(6)	Incorporated by reference to the corresponding exhibit number filed by the Company with the Securities and Exchange Commission on December 19, 2014 with the Current Report on Form 8-K dated December 17, 2014

(7)	Incorporated by reference to the corresponding exhibit number filed by the Company with the Securities and Exchange Commission on October 16, 2014 with the Quarterly Report on Form 10-Q for the quarter ended August 30, 2014

(8)	Incorporated by reference to the corresponding exhibit number filed by the Company with the Securities and Exchange Commission on June 6, 2014 with the Current Report on Form 8-K dated June 11, 2014

(9)	Incorporated by reference to the corresponding exhibit number filed by the Company with the Securities and Exchange Commission on June 26, 2014 with the Current Report on Form 8-K dated June 23, 2014

(10)	Incorporated by reference to the corresponding exhibit number filed by the Company with the Securities and Exchange Commission on September 12, 2014 with the Current Report on Form 8-K dated September 11, 2014

(11)	Incorporated by reference to the corresponding exhibit number filed by the Company with the Securities and Exchange Commission on October 29, 2014 with the Current Report on Form 8-K dated October 29, 2014

(12)	Incorporated by reference to the corresponding exhibit number filed by the Company with the Securities and Exchange Commission on November 11, 2014 with the Current Report on Form 8-K dated November 14, 2014

(13)	Incorporated by reference to the corresponding exhibit number filed by the Company with the Securities and Exchange Commission on December 5, 2014 with the Current Report on Form 8-K dated December 15, 2014

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	MONARCH AMERICA, INC.

Date: March 31, 2015	By:	/s/ Eric Hagen
		Eric Hagen President and Chief Executive Officer (Principal Executive Officer)

	By:	/s/ Jonathan Hunt
		Jonathan Hunt Vice-President, Treasurer and Secretary (Principal Financial and Account Officer)

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Signature	Capacity	Date

/s/ Eric Hagen	President and Chief Executive Officer and director	March 31, 2015
Eric Hagen	(Principal Executive Officer)

/s/ Jonathan Hunt	Vice-President, Treasurer and Secretary and director	March 31, 2015
Jonathan Hunt	(Principal Financial and Accounting Officer)

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